Are big financing rounds and venture star multiples a realistic expected outcome?

Like many of our colleagues, our initial investment hypothesis is always to achieve a 5-10x return when we invest. When achieved, these are often referred to as the stars, performers or unicorns of a venture capital portfolio.

Sunstone continuously monitors and analyzes all M&A transactions for therapeutic companies HQ’ed in Europe, achieving an exit transaction value exceeding EUR 50M and we recently looked at the multiples for investors participating in Seed, A, B, C and D rounds relative to the amount invested. Our analysis indicates that it is unlikely, or very challenging, to achieve a multiple above 5x, or even 3x, once the combined investment exceeds EUR 45M!

Is the strategic, hard to quantify, technology-value of a platform disregarded in favor of a simpler risk-adjusted project NPV around EUR 45M?

Is this a European phenomenon and are our American colleagues better at creating >EUR 45M, >5x companies?

What is the potential impact of the increasing size of European venture capital funds and how will it impact future return multiples when these funds deploy more capital per portfolio company?

What do you think?
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5 latest press releases

Galecto Completes Enrollment in Phase 1b_2a GULLIVER-2 Trial of its Selective, Oral Galectin-3 Inhibitor GB1211 in Liver Cirrhosis

BOSTON, March 29, 2022 (GLOBE NEWSWIRE) -- Galecto, Inc. (NASDAQ: GLTO), a clinical-stage biotechnology company focused on the development of novel treatments for fibrosis and cancer, today announced it has completed enrollment in Parts 2 and 3 of its ongoing 3-part...

Sunstone Life Science Ventures is looking for a Student Assistant

No longer accepting applications We are looking for a student to join our team for approximately 8 hours a week. As part of the team, you will play a pivotal role in the management of our deal flow, which lies in the order of 400-500 opportunities every year....

Sunstone announce new investment in immuno-oncology company STipe Therapeutics

Sunstone Life Science Ventures today announce it has invested in new portfolio company Stipe Therapeutics ApS (“STipe”), an immuno-oncology company dedicated to developing novel cancer therapeutics based on its first class drugs modulating the STING pathway.

Zealand Pharma achieves primary and all key secondary endpoints in pediatric Phase 3 trial with dasiglucagon for severe hypoglycemia

Zealand Pharma A/S (“Zealand”) (Nasdaq: ZEAL), a Copenhagen-based biotechnology company focused on the discovery and development of innovative peptide-based medicines, announces positive results in the pediatric Phase 3 trial with dasiglucagon for severe hypoglycemia...

5 latest articles

Who is in the driver’s seat of our industry?

A recent analysis from Pharma Intelligence | Informa 2021 highlights the current trends of pipeline products (top panel). We have subsequently surveyed Sunstone’s incoming deal flow for the same period and noted the correlation for the top 3 categories with oncology...

US IPO: Value recognition? Not really! Trading liquidity? Yes!

We previously looked at M&A of VC funded private and listed companies in the EU and US ( Listing EU companies in the US is perceived as more attractive or beneficial – but is it reflected in the numbers?  Recently, we decided to take a...

Why would you do a US IPO?

We recently compared EUR >50M M&A’s of VC funded EU and US drug developing companies and concluded that a substantial difference exists between the EU and US ( Previously we have also looked at EU M&A’s before or after an IPO....

M&A multiples in the US – should you go west?

Sunstone has previously investigated the return multiples of venture capital funded companies HQ’ed in Europe ( and concluded that when the total invested amount exceeds EUR 50M, the return multiple tends to stay below 5 in M&A transactions....

Best country for sourcing new deals?

Do you also in your mind have a priority list of destinations to visit once the world normalises and you can get back on a plane? If so, and if you are a Venture Capitalist, you may also be wondering which countries have been creating most Life Science M&A...

Why are we investing in Drug Development and hesitating with regards to Medical Devices or Diagnostics?

Part of the answer is obviously that our past experiences and successes fall within Drug Development – but also that both MedTech and Diagnostics seem to have a lower likelihood of getting to an exit once you have invested. Defining the field for Medical Devices and...